This week, the drama with China continues. This time, the worst case scenario that I mentioned last week happened: China has banned cryptocurrency trading – at least the fiat to crypto portion.
This is probably going to cause most of the casual Chinese traders to leave cryptocurrency trading because they don’t have a reliable gateway to convert their crypto holdings to fiat.
Because of the uncertainty around the Chinese situation, during the last week, Bitcoin has dropped 12% to around $3,700 and Ether has dropped by 14% to around $250.
As the worst case scenario already happened, it looks like China will not be able to do much anymore about banning cryptocurrency. The last thing they can do is to seize the operations of Bitcoin farms in China, which seems unlikely to me.
The trading ban would affect various cryptocurrencies to different degrees. I have put together CNY trading volume as a percentage of total trading volume for the major cryptocurrencies in the table below:
As you can see, the trading volume for BTC and ETH in CNY makes up less than 15% of total trading volume, while CNY has a far higher influence on the trading of LTC, BCC, and ETC.
Therefore, I believe the China trading ban would affect the prices of Litecoin, Ethereum Classic, and Bitcoin Cash more than Bitcoin and Ethereum.
Developments in the Cryptocurrency World
Chinese exchanges closing or ceasing fiat to crypto trading by end of October: https://www.coindesk.com/huobi-okcoin-stop-yuan-bitcoin-trading-octobers-end/
China ban on ICO is temporary, licensing to be introduced: https://cointelegraph.com/news/china-ban-on-ico-is-temporary-licensing-to-be-introduced-official
Microsoft offers blockchain as a service: https://azure.microsoft.com/en-us/solutions/blockchain/
Swiss Canton of Chiasso will accept Bitcoin for tax payments: https://www.swissinfo.ch/eng/swiss-fintech_chiasso-accepts-tax-payments-in-bitcoin/43503464
JPMorgan CEO Jamie Dimon says bitcoin is a 'fraud' that will eventually blow up: https://www.cnbc.com/2017/09/12/jpmorgan-ceo-jamie-dimon-raises-flag-on-trading-revenue-sees-20-percent-fall-for-the-third-quarter.html
Former Bitcoin exchange BTC-e reopens as WEX.nz: https://cointelegraph.com/news/former-bitcoin-exchange-btc-e-reopens-as-wexnz
Ethfinex introducing the ERC20 Tether: https://blog.ethfinex.com/announcing-the-erc20-tether-c84cc33f076f